“It Was Only A Matter of Time”: Trump Sets His Sights on the Fed’s Tightening and the Strong Dollar

via Adem Tumerkan @ Palisade-Research.com

 

Who says that the President doesn’t – and shouldn’t – pay attention to the U.S. Dollar’s value?

Well – President Trump sure does. . .

Just look at his tweets from this morning. . .

This came just a few hours after Trump criticized the Federal Reserve’s tightening path.

Trump went on to say during an interview with CNBC that he’s “not thrilled” with the Fed’s tightening – potentially slowing the economy.

 

“I don’t like all of this work that we’re putting into the economy and then I see rates going up.” said Trump

 

His comments shocked many. There’s a tradition – or rather a taboo – that the White House stays away from monetary policy.

But we should know better – Trump will always do what Trump wants.

And it’s clear that what trump wants is a weaker dollar. . .

 

So far, the Fed’s hiked rates five times since Trump entered office. And from what I can see, the economic growth cycle has peaked and now is heading downwards. 

I’ve written that over the last 15 months – the U.S. economy has grown a bit. But that was all from a weakening dollar.

From January 2017 to February 2018 – the USD fell more than 14%. This greatly boosted exports and helped growth – not to mention the massive amount of debt the Treasury piled on and is trickled down into the economy. 

But since March, there’s been a massive short-covering rally for the dollar. And that fueled a reflexive short-term feedback loop into an even stronger dollar, all-while decimating Emerging Markets and commodities – basically anything that’s anti-dollar.

Now the rapidly strengthening dollar is becoming a hinderance – especially when Trump has engaged the U.S. into a trade war with the second largest economy in the world – China.

Trump also told CNBC that he’s “ready to go” up to $500 billion in trade tariffs on every single Chinese-made item that enters the U.S.

It’s hard to see what else this would accomplish besides higher cost goods for consumers across the board. History has shown us that protectionist policies only keep inefficient and lower quality goods on shelves. . .

 

Trump’s comments yesterday towards the Fed and their rate-hikes shouldn’t be taken as a ‘one-off’ statement. For the U.S. to outlast China and Europe – and every country at that – the Fed will have to cheapen the dollar.

It’s like watching a slow-motion train wreck – we can see everything unfolding in due time. And as I’ve always maintained – the Fed is only tightening so that they can cut rates later to stimulate the economy during a recession.

Otherwise said – the Fed’s in a race between time and how much they can tighten before it triggers a recession. . .

Don’t be surprised when Trump eventually calls for a weaker dollar. Because foreign countries – especially China – won’t hesitate to cheapen their currencies so they get a trade advantage.

Trump will eventually realize that the dollar is the key to world trade – and he will weaponize it.

Then it’s a race to the bottom for everyone. . .

Comments

The Real Tony Fri, 07/20/2018 - 17:44 Permalink

Trump should be impeached for even using the word "manipulation". Trump wrote the book on manipulating every last thing in existence since he was unfortunately elected.

Silver Savior Fri, 07/20/2018 - 18:05 Permalink

Why doesn't Trump use his huge ego and do something good like getting us into Qe 4 and rates at negative? We were on the right track before the election. 

I want to see an easy money/credit paradigm continue.

fbazzrea The Real Tony Fri, 07/20/2018 - 23:38 Permalink

Trump's fake recovery is all based on fabricated data.

the data is compiled and provided by federal agencies and the Federal Reserve System. he doesn't create the data. as the President of the United States would he not be expected to believe it is accurate? or are you saying these same data providers who were responsible for providing data during Obama, Bush I/II and Clinton are unreliable? did you complain of fabricated data then or is this a recent epiphany? i can just hear the commies and MSM hysterics now if he were to begin using non-govt data to base his economic policies. what would you have him do?

The dollar rising is real but all based on everything fake.

do you have a clue as to why the dollar is rising? it's not "all based on everything fake." and why would you think its rising is real? it's not. the Fed (can you say globalist bankster cabal?) is 100% responsible for this temporary correction in its ultimate descent. it is not rising as a function of free markets. and Trump knows it.

everyone's an economic genius--except Trump. but he's got an MBA from Wharton. do you?

 

In reply to by The Real Tony

luckylongshot fbazzrea Sat, 07/21/2018 - 09:37 Permalink

The problem Trump faces is that with total debt north of $200 Trillion (Druckenmiller) every American tax payer now owes on average $2 million. A 1% increase in interest rates equates to $20,000 per taxpayer per year. With average incomes slightly over $50,000 per year a 1% increase in interest rates effectively guarantees collapse. This is why Trump must move against the Fed.

In reply to by fbazzrea

oncefired The Real Tony Fri, 07/20/2018 - 22:29 Permalink

We all know its a big Scheme, but I would have guessed things would have crashed years ago but the fuckers keep in running - no one knows how or when the crash will come. Hoard whatever percentage of PM's you can afford - sooner or later China & Russia back their currency with gold and the dollar is toilet paper. China has a major debt problem like us, plus the have to keep 1.2 billion people working or there is a massive revolution. they tried to sneak their latest devaluation by hoping nobody would notice, we all know they have an inflation problem. It has to Crash, but who knows when and what causes it! The Fuckers will just start another war before it happens!

In reply to by The Real Tony

Haitian Snackout Fri, 07/20/2018 - 22:04 Permalink

Is everyone here under 35? The economy was far better when savers were rewarded and debtors penalized. Slow the economy, yeah, sure, the fake FIRE economy. Twenty years of zirp and we have to listen to this nonsense as a reward. 

petroglyph Fri, 07/20/2018 - 22:15 Permalink

"History has shown us that protectionist policies only keep inefficient and lower quality goods on shelves. ." Is the author seeing real high quality stuff on the shelves now? Cuz I'm missing it.

Everything wrapped in plastic is single use, no quality involved. 

Petey4Prez Fri, 07/20/2018 - 23:04 Permalink

I remember watching Greenspan on TV when I was a little boy, and I asked my dad, "who is this guy?" He said this is the pereon that controls interest rates! I knew right then and there that this was the most powerful man in the world and not the president.

mosfet Sat, 07/21/2018 - 04:41 Permalink

Something stinks in Denmark and it ain't just the cow shit.  Powell made it crystal clear that he would continue Yellen's rate hikes & balance sheet roll-off and yet Trump appointed him.  Now Trump's criticizing that same policy Powell has followed as advertised.  So either Trump's a complete idiot who was clueless as to the obvious cause & effect of what Fed tightening would lead to, or something's changed?  Maybe a coin toss here but let's go with 'something's changed'.

So we really have only 2 fairly recent economic changes of direct interest to Trump.  A stock market that seems to have topped out and gone into mild correction territory as a result of rising interest rates from Fed tightening, and implementation of tariffs by Trump himself.  My guess is it's both because I believe tariffs were the stop-gap solution to funding exploding US Gov debt thru massive import taxes VS the alternative...spiking yields & a crashing market due to the US Treasury having to issue surplus paper to pay for that debt.  If this were a sustainable arrangement then I suspect Trump wouldn't be criticizing his own guy at the Fed.  So this leads me to believe that tariffs are only a band-aid that Trump now views as untenable.  So he's now switched strategies to pinning the blame where it truly lays, on the Fed.  I don't like Trump for a lot of reasons but I think that his business instincts are well tuned when comes time to stop BS'ing and start blaming. 

IMO the best outcome I see for this is Trump and Powell exchanging insults.  If there's one thing globalists require most to succeed in stealing citizens' wealth, assets and productivity, it is to operate in obscurity away from media attention.  So godspeed Trump in shining a light on those cockroaches, and keep it up until either Powell resigns or capitulates so we can resume flank speed over the cliff of currency debasement.  I'll also immensely enjoy watching the White House, Republicrats and MSM recoil in horror as Trump disses their beloved money printers...watch them brandish the fangs on this one.

tunetopper mosfet Sat, 07/21/2018 - 09:54 Permalink

Trump mostly just repeats what he's told to say . He doesn't REALLY understand monetary economics. He has a vague idea that higher rates cause certain things to happen, but there's no way he understands the transmission mechanisms of financial institutions and trade flows, disintermediation and the money multiplier effects. So please understand that most of what Trump says is just parrot talk coming from advisors like Kudlow (who, BTW, doesn't have a PhD in Econ either)

In reply to by mosfet

helloimjohnnycat Sat, 07/21/2018 - 05:36 Permalink

So, MAGA means the Time Value of Money erodes to absolute zero ?

Now that's a Chillin' Plan from our fave buffoon.

Wasn't it Eddie Chiles who said, " If you don't have a printing press, get one ! " ?

 

Davidduke2000 Sat, 07/21/2018 - 07:14 Permalink

trump claim to be fighting a trade war , however everything indicate that he cannot win especially against China.

the us has nothing  of value to sell except the fraud of the stock market, but no tangible product priced to sell.

us cars are not even comparable to European or Japanese cars and are almost 40% more expensive plus the artificially high us dollar make selling these cars an impossible task.

Selling weapons to a saturated market by Russia and China is also impossible unless they are sold on credit that will never be repaid.

Few month ago, the treasury said that the us dollar was too high, trump flipped out and they had to backtrack, now trump realized unless the usd is dropped by a lot, any chance of selling abroad is an impossible task.

I would like to know how he can lower the dollar and the same time be able to sell government bonds without raising interest rates.

At the end trump would have to live with artificially high usd until it crashes on its own which should not be long time from now.

JibjeResearch Sat, 07/21/2018 - 10:46 Permalink

If and When the USD returns home, which I believe 25% to 40% will, there will be inflation.  The Fed has to raise rate.  This is a must... you dumb fuck fag as fuck stupid puzzie whore Trump!

You are a fucken moron, Trump!

helloimjohnnycat JibjeResearch Sat, 07/21/2018 - 17:01 Permalink

Regarding the USD, many conservatives who voted for Trump are realizing the boy is a bit slow.

I keep telling you guys Trump doesn't know squat about manufacturing.

Developing properties is a different game than making " better widgets at competitive prices ". With so many widgets becoming highly sophisticated & specialized and utilizing advanced integrated circuits, the knowledge required to achieve successful builds requires years of education and training. R & D is excessive.

For decades, America has not had a government working to support private enterprise.

If we did, tax rates for independent builders & suppliers would be drastically lower. Regulations would be manufacturer-friendly without needless rolls of Red Tape.  That alone would make products produced in America more affordably priced in international markets.  Higher quality then makes the sale. A related topic would include environmental systems being funded which keep our country clean as opposed to paying-out larger dollar sums as welfare to rampant numbers of illegals crapping our city streets. I shouldn't have to explain & elaborate the economics.

Trump has had his share of golden showers !  Every time he's given the nickel tour at some Yankee production outfit replete with their canned dog & pony show, Trump comes out soaked. Actually, he comes out knowing less than before he walked in. Before the tour began, he was amazed and wondering how do they do it ?  He knows that he doesn't know much.  But then he's scuttled along to a finished product while the cameras are recording. A technician guides his hand and Trump latches onto a finished product.  He honks a horn, flashes a light, or rings a bell and it's all smiles & laughter. Problem is, DT's ego is blocking the detailed data which enabled the finished product and he only sees a Big Picture useful to benefit Donnie Trump. He's now in possession of all he needs to know. Trump thinks : Nothin' to it.  He's now an expert and when he reiterates the first stages of what helps Donnie, the balance of the political class and ADD Americans nod their heads and wait to absorb another line of propaganda with commercial message

All in all, a litany of Trumps is not all bad for large manufacturers but does little for the small guys. Because the backbone of a strong America has always been small to medium-sized companies, we need direct relief from Washington DC and the zionist control holding us back / plucking our golden geese.  

Despite his many short-comings at least Trump communicates without a teleprompter and doesn't cram a load of Marxist garbage down our throats like, " You didn't build that. "

In reply to by JibjeResearch